Truth lies between equality and growth
After the fall of the Berlin Wall, people celebrated the triumph of capitalism. Less than a quarter of a century later, however, people began to suspect that capitalism was nearing its end. The financial crisis burst the bubble about capitalism and the gap between the rich and the poor was growing. People found the populists’ socialist slogans, which often began with “free,” tempting. Politicians wanting to use the crisis as an opportunity to seize power began riding the populist trend, and the leftist intellectuals hopped on the bandwagon because they considered the crisis a sign of capitalism’s failure.
In the last five decades, we have experienced an ideological war over the economy. There may still be struggles ahead, but we have learned a clear lesson. Neither a socialist economy under strict state control nor an uncontrolled capitalist economy are sustainable in the long term.
Today, most developed countries stand on the side of capitalism. Those countries that lean right prioritize economic growth and contemplate how much wealth inequality should be allowed. Those that lean left value equality more and consider how much growth they can afford to sacrifice. There is no right or wrong way. The important point is to maintain a balance between equality and growth.
We need to understand that neither capitalism nor socialism alone can make an economy ethical. Karl Marx’s belief to the contrary was his biggest error. Adam Smith advocated the leadership of an “invisible hand,” not because he thought the free market was ethical but because he was wary of the greed of giant corporations.
Last week at Harvard University, a group of students left class during a lecture by Professor Gregory Mankiw, who the students’ said emphasized the market principles of capitalism and unreasonable financial practices. Unlike the Harvard alumni who have contributed to the financial crisis, these students are refusing to get a free ride. It is admirable that they seem to understand that truth can be found somewhere between equality and growth.
*The writer is the J Editor of the JoongAng Ilbo.
By Lee Hoon-beom